The ASC space has been rife with practice mergers, consolidation efforts and large-scale acquisitions in recent years as hospitals, health systems and private equity-backed groups look to make investments in the rapidly growing space.
Leaders at independent practices are considering their strategies for practice growth and sustainability in the years ahead — and whether private equity should be included in those plans.
Three leaders in the ASC space recently joined Becker’s to discuss their perspectives on dealmaking with PE groups and how ASCs can stay afloat in an increasingly complex market.
Editor’s note: Responses have been lightly edited for clarity and length.
Question: If a private equity-backed buyer approached you about your practice or ASC today, would you take the meeting? What would make you say no?
Anna Ehlers. Senior Director of Ambulatory Care at Sky Lakes Medical Center (Klamath Falls, Ore.): I would not. We are very committed to our community and providing necessary services to the people we care for. We are in a geographically isolated area, necessitating that our patients travel over a mountain pass 72 miles to the next nearest hospital, and we provide the majority of primary care and specialty care services to a considerable catchment area. My fear would be that PE would eliminate needed services that do not produce significant profit margins and that a PE-backed buyer would not have the same sense of responsibility to our community that we have, where we are willing to have slimmer margins to do what is best for the people we serve.
Chris Gill, PhD, CRNA (Chicago): Yes, I take the meeting. I led anesthesia services as a chief CRNA before moving to the C-suite, and the lesson holds at both levels: You cannot negotiate from a position you never scouted. Knowing your market value is due diligence. It is not commitment, and it is not disloyalty to your colleagues or your patients. What ends the conversation for me is clinical governance. If the term sheet moves authority over staffing ratios, coverage models, or case selection to a management company, I walk. I have watched anesthesia groups take a strong multiple and lose control of their own ORs inside two years. No valuation covers that loss.
Betsy Grunch, MD. Neurosurgeon at Longstreet Clinic (Gainesville, Ga.): I’d take the meeting. You should always understand your options, but I’d go in assuming it’s a “no” until proven otherwise. My biggest dealbreaker is loss of clinical autonomy: If the structure hands non-clinicians control over how I practice, staff my OR, or make case-by-case medical decisions, that’s over immediately. I’d also want total clarity on what happens to my patients and my team if the deal falls apart mid-process; that transition risk is something a lot of physicians don’t game out until it’s too late.
At the Becker’s 32nd Annual Meeting: The Business and Operations of ASCs, taking place October 29-31 in Chicago, ASC leaders, surgeons and healthcare executives will explore strategies to drive growth, enhance operational performance, navigate reimbursement challenges and prepare for the future of ambulatory surgery. Apply for complimentary registration now.